Final answer:
To find the monopolist's profit-maximizing price, we typically equate marginal revenue (MR) with marginal cost (MC) to find the quantity that maximizes profit, then use the demand curve to find the corresponding price. Without the marginal cost, we cannot definitively determine the exact profit-maximizing price. The example mentioned a price above the average cost, suggesting positive profit, but with the provided data, we cannot verify if the price of 5 is indeed profit-maximizing.
Step-by-step explanation:
To determine the profit-maximizing price for a monopolist's product with a demand equation of p=32-2q and an average cost function of c=4, we first need to calculate the profit-maximizing quantity where marginal revenue (MR) equals marginal cost (MC). Since the marginal revenue curve is derived from the demand curve, we calculate MR and set it equal to MC. However, in this case, we have not been given the marginal cost. Typically, a monopolist will find the point where MR = MC, which corresponds to the quantity that maximizes profit. After determining the profit-maximizing quantity, we would draw a line straight up from this quantity to the demand curve to establish the corresponding price.
As the average cost is constant at c=4, profit-maximization would occur where price is above this average cost. To find the profit-maximizing price, we can use the formula for total revenue (price x quantity) and total cost (average cost x quantity) to maximize profit, which is the difference between total revenue and total cost. Unfortunately, without additional information, such as marginal cost or further instruction on how price and quantity are determined, we cannot find the exact profit-maximizing price in this instance. Moreover, the suggested price of 5 does not appear to be the profit-maximizing price since the average cost is 4, and this does not take into account the relationship between MR and MC.